Answer extracted from the SmarterMarkets podcast — listen to the full episode below.
How does the Paris Agreement enable countries to cooperate on carbon markets?
The Paris Agreement provides two main cooperation paths under Article 6: bilateral or plurilateral agreements where countries set their own terms as long as they prevent double counting, or the UN-managed hub-and-spoke model under Article 6.4. Countries can leverage established standards like ARCTREES, ACR, VERA, and CAR, or develop their own frameworks aligned to their specific climate objectives.
Article 6: The dual pathway for market cooperation
The Paris Agreement framework splits international carbon market cooperation into two distinct mechanisms, each designed to suit different national priorities. Section 6.2 enables direct bilateral or plurilateral deals, where two or more countries negotiate carbon credit transfers directly. The only binding requirement is preventing double counting—ensuring a credit isn't claimed as an emission reduction by both buyer and seller simultaneously.
Article 6.4 takes a different approach by establishing a UN-administered international mechanism that operates on a hub-and-spoke model. Rather than countries dealing one-to-one, they can route carbon credits through a centralized UN system. This approach creates standardization and reduces the administrative burden of negotiating bilateral terms for each transaction.
Standards as the enabling layer
Neither Article 6.2 nor 6.4 forces countries into a single accounting or verification standard. Instead, they can deploy pre-approved standards already recognized globally—such as ARCTREES, the American Carbon Registry (ACR), VERA, and the Climate Action Reserve (CAR)—or craft bespoke standards tailored to their national circumstances.
This flexibility reflects a pragmatic reality: countries have vastly different baseline measurement systems, verification infrastructure, and climate priorities. As Dirk Forrister explains in the episode, the goal is to embed serious targets into law while retaining enough flexibility to make those targets achievable. Forcing a one-size-fits-all standard would undermine buy-in from nations with different institutional capacities.
"We want serious targets that people will stick to, that are embedded in law, that allow flexibilities, so that we can really achieve the objectives of the Paris Agreement."
Dirk Forrister — President and CEO, International Emissions Trading Association (IETA). With 14 years leading IETA, Forrister has been instrumental in shaping carbon market provisions within international climate agreements. His research collaborations with Harvard and other institutions have focused on carbon pricing design and market integrity, making him a key architect of the frameworks discussed here.
The real substance of cooperation under Article 6 thus rests on two pillars: clear rules against double counting, and transparency in which standard a country chooses. One nation might use VERA for forestry credits while another deploys ACR for renewable energy offsets. The Paris Agreement doesn't dictate which; it only requires that the choice be documented and that credits flow without claiming reductions twice.
For a deeper dive into how these mechanisms are already reshaping aviation and regional markets, listen to the full episode, where Forrister discusses the explosive growth in Corsia demand and the European Commission's latest extensions to their emissions trading systems.
Key takeaways
- Article 6.2 allows bilateral or plurilateral carbon trades between countries, provided double counting is prevented.
- Article 6.4 provides a UN-hub model for countries that prefer centralized international market infrastructure.
- Countries can use globally approved standards (ARCTREES, ACR, VERA, CAR) or design their own, provided they prevent double claiming.
- Flexibility in standard choice balances the need for serious, legally embedded targets with realistic implementation across nations with different capacities.
See also
What is the current supply-demand imbalance in Corsia markets and how is it evolving?
When the year started, the Corsia market was roughly balanced with around 35 million tons of demand and approximately that much supply approved. Currently, demand has grown to approximately 200 million tons of need, far outpacing supply.
How are California and Quebec carbon markets working together, and does this model apply to other regions?
California and Quebec operate in tandem through the Western Climate Initiative framework, where states co-designed a program that mirrors the cooperation principles embedded in the Paris Agreement's Article 6 mechanisms.
What are the major policy changes occurring in the European emissions trading system and related carbon market programs?
In July 2026, the European Commission proposed major tweaks to their main emissions trading system. They have also established a second emissions trading system for road transport and buildings, starting in 2028, extending carbon market discipline beyond power and industry.